Sectarian splits and oil expose Iraq's faultlines
BAGHDAD Dec 22 (Reuters) - With U.S. troops gone, can Iraq withstand the political infighting, sectarian violence and struggles for land and oil that threaten to pull it apart?
It has been a disastrous few days. Accused by the Shi'ite prime minister of running death squads, the Sunni vice president has taken refuge in the Kurdish north, exploiting the central government's lack of authority in the oil-producing region.
The power-sharing government in Baghdad is in disarray, with Sunnis reinforced in their suspicions that Shi'ite Prime Minister Nuri al-Maliki is bent on sidelining them.
And the bombers are back: at least 63 people were killed and 194 wounded on Thursday in more than 10 explosions across Baghdad, mostly targeting Shi'ite districts.
Iraqi and foreign analysts say talk of the country breaking up looks premature. But the risks would increase sharply if there were major and prolonged sectarian violence, and if Iraq's neighbours, Shi'ite power Iran and Sunni Gulf states, intervened in support of breakaway movements.
The key question mark is neighbouring Syria: Shi'ite leaders worry Syria's turmoil will spill over the border, encouraging protests in the western Sunni provinces, especially if hardline Sunnis replace President Bashar al-Assad in Damascus.
Maliki's Shi'ite-led government is close to Iran, and the fall of Tehran's ally Assad could shift the regional power balance.
"The main danger Iraq faces with Syria is for its unity," said a senior Iraqi Shi'ite lawmaker. "Many powers see dividing Iraq as in their favour. If you encourage provinces on the borders, it is like cutting the cake. The question of Iraq's unity is still not resolved."
BACK FROM THE BRINK
Iraq has weathered worse crises: with the help of a U.S. troop surge, it pulled itself back from the brink of civil war after intercommunal violence, unleashed by the U.S.-led invasion in 2003, reached a peak in 2006-7.
Demands for regional power have simmered for years in a country whose modern borders were drawn up in 1920 by the League of Nations, pulling Sunnis, Shi'ites, Kurds and Turkmen into a new nation.
Sunnis suspect Maliki of trying to cement Shi'ite control after the fall of dictator Saddam Hussein, a Sunni. Those fears will be compounded by the terrorism charges against Vice President Tareq al-Hashemi, which he rejects, and by Maliki's request to parliament to remove the Sunni deputy prime minister, Saleh al-Mutlaq.
A senior Obama administration official stressed that Iraq's factions had so far addressed their differences peacefully, rather than resorting to violence, and dismissed the idea Maliki's moves were linked to the U.S. troop withdrawal that was completed on Sunday.
"We actually think they reflect long-standing, unresolved political dynamics that have caused crisis in the past, even the recent past, without plunging the country into turmoil," he said.
But by fleeing to Kurdistan, Hashemi has scratched another sore - the festering dispute between the Kurds and the central Baghdad government over territory and oil.
Kurdish sources said tensions with Baghdad were likely to rise. But they believed the consequences would be much worse - between Sunnis and Shi'ites and Kurds and Sunnis, especially in disputed areas - if the fugitive vice president were handed over and tried in Baghdad.
U.S. troops had acted as a buffer in the north, working on joint patrols with the Iraqi national army and Kurdish Peshmerga forces, especially over who controls hotspots like the oil city of Kirkuk whose oilfields represent nearly a quarter of Iraq's oil exports or around 460,000 barrels per day.
Rival factions could take advantage of a perceived vacuum to seek more control of areas that are under dispute.
"These areas in northern Iraq are perhaps...the ones in which U.S. troops have played their most important role over the last 1-1/2 years," said Ali al-Saffar, an analyst with the Economist Intelligence Unit.
"The Kurds have been vocal in their demands to annex some areas of Diyala and Nineveh. Any Arab backlash would put the government in an extremely precarious situation."
Ignoring warnings from Baghdad, Kurdistan has pushed ahead with deals with U.S. oil giant Exxon Mobil, the first major explorer to test the waters by signing with the regional government. Baghdad says the deals are illegal.
For Maliki, it is a tricky balance. Taking a hard line with Exxon risks jeopardising its investments in the south of the country, but allowing the Kurds to win may encourage demands from other regions seeking autonomy.
These have increased over the past year, as frustration rises with a government that has failed to deliver basic services, electricity and food rations.
Iraq's constitution allows provinces to seek more autonomy and control over their finances, subject to a public referendum and parliamentary approval.
Southern oil-hub Basra presented its demand more than a year ago. Now provincial officials are trying to cancel a $17 billion Shell gas deal as a way to break away from the control of the central government and solve its shortages of housing and power.
Such a move could erode Baghdad's control over revenues from major oilfields in the predominantly Shi'ite south, where Iran's influence is stronger.
"Baghdad and the government there do not know what is happening in Basra - there are no services here," Hussein Faydh, a civil servant. "We have all the oil and we have nothing in return."
Sunni provinces in the west, like Salahuddin, are also pushing for more independence against a government many see as determined to push a Shi'ite agenda, including by arresting hundreds of suspected members of Saddam's banned Baathist party.
Some fear increased sectarian tensions may provoke Sunni neighbouring countries such as Saudi Arabia to urge dissatisfied Iraqi provinces to push back against the Shi'ite-led central government. That in turn could open the way for Iran to seek to maintain its influence intact, too.
"There is another scenario where Iraq stays on the tightrope and balances interests enough that they muddle through. It depends what happens in Syria," said a Western diplomat in Iraq. "A chaotic Iraq is in nobody's interest. You want influence in the place, but you want it to work."
Anthony Cordesman, an analyst at Washington's Center for Strategic and International Studies, said the past week's developments had increased the risks of violence, political paralysis, a battle for oil revenues and a worsening of Sunni-Shi'ite and Arab-Kurdish tensions.
It was too early to talk about a possible break-up of Iraq, Cordesman said.
"But a nation that does not have a functioning government, or one that favors a single faction, whose people are divided and cannot in practice think of themselves as Iraqis - as distinguished from their ethnic and sectarian identity - is a very serious problem and that problem is worse because of what has been happening over the last week." (Additional reporting by Arshad Mohammed and Alister Bull in Washington; editing by Mark Trevelyan)